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In the forthcoming quarterly monetary policy review, RBI should reduce repo rate by 25bps as a) the demand-led (or core) inflation (where RBI’s policy is most effective) has already eased substantially, b) the economic slowdown is deepening as shown by GDP data, IIP numbers, rising NPA cycle etc, and c) the global economic downturn is spreading, suggesting lower commodity prices and downside risks to India’s growth. This warrants a monetary easing in our view. Indeed, we argue that high interest rates are now becoming counter-productive. However, given that RBI has shifted its focus from core to headline inflation of late (where upside risk exists due to poor monsoon), there is a likelihood that the central bank may resist further easing this time.

RBI Policy Preview - Repo rate cut not ruled out

Regards,

Tata Steel -TP: INR224 Sell: Motilal oswal,

Net debt at INR524b; translation gains, asset sales drove net worth
Takeaways from FY12 Annual Report
 Despite free cash flows of INR22b, net debt increased 5% to INR524b.
 Net worth increased by INR77b largely due to asset sales and asset translation gains.
 EPS adjusted for payout on hybrid perpetual securities 11% lower than reported EPS.
 Outlook not very encouraging; maintain Sell.

Jubilant Life Sciences -Q1FY13 review – Strong start to the year, Nomura research,

Strong guidance and improvement in profitability encouraging

Action: Retain Buy; strong start to the year
Jubilant reported strong Q1FY13 results with an adjusted PAT of
INR1.09bn, 17% higher than our estimates. Sales and core EBITDA
recorded 31% and 47% y-y growth, respectively. The growth was driven
by higher volumes across business segments (ex-DDDS) and favourable
currency movement. Management has guided for 20-22% revenue y-y
growth for FY13 and EBITDA margins of 21%. Over three years,
management has guided for a revenue CAGR of 20% with an
improvement in margins. At a quarterly adjusted net profit run rate, RoE
and RoCE were at 18% and 15%, respectively. We believe the moderation
in capex intensity and sustainable improvement in return ratios will be key
to the stock’s re-rating. The company has guided for a debt-to-EBITDA
ratio of less than 2.5x and net debt-to-equity of less than 1.0 by FY15.

Reader Query: Don’t let loans hit your SIPs :: Business Line

I am 23. My monthly salary is Rs 40,000 and I am left with Rs 25,000 as surplus. I invest in both EPF and VPF. I am planning to take a term insurance policy for Rs 1 crore. I intend to invest in some fixed deposits. Should I let some cash sit idle in my savings account or should I opt for sweep facility to take care of liquidity? After deciding on the above, I want around 5 per cent of my portfolio to be invested in gold ETFs. I am planning to book a flat in Delhi by next year. I want to start SIPs in mutual funds. Should I consider only equity funds or balanced and debt funds as well? — Radhika Gupta

Advertising revenue bounces back Zee Entertainment Enterprises ::centrum

Advertising revenue bounces back
Zee Entertainment Enterprises reported strong Q1FY13 results on the back of
18% YoY ad revenue growth and 19% YoY subscription revenue (23%
domestic and 16% international) growth. Continued investment in content
has helped the company gain substantial market share across channels.
Lower losses in sports and healthy topline growth have helped margin
expansion, while high tax rate muted profitability. Maintain Neutral rating on
the stock.
Results better than expectations: ZEEL posted 20.7% YoY increase in net
sales to Rs8430mn backed by strong advertising revenue growth of 18% to
Rs4472mn. Subscription revenues were up 19.3% led by domestic revenues.
Operating profit was up by 49.5% to Rs2333mn led by 533bps margin
expansion. PAT was in-line with our expectations at Rs1582mn, up 18.3% YoY.

Unichem Laboratories :Benefits from re-structuring :Centrum

Benefits from re-structuring
We recently met the management of Unichem Laboratories (ULL). Key take aways from the meeting are:
The company has undergone re-structuring over last six quarters and is now poised for good
growth.
On a standalone basis, ULL derives 69% of its revenues from the domestic market and 30% from
the international markets.
ULL entered into acute segment (70% of the domestic market) in FY11 and commenced a new
division for acute segment with 400MRs. However, the company faced higher attrition rate of 35-
38%. ULL also witnessed sharp fall in EBIDTA margin from 25% to 13%.
The company is now focused on cost structure and the EBIDTA margin has grown on QoQ basis.
In Q4FY12, the EBIDTA margin improved by 60bps QoQ.
ULL has been able to achieve inventory level reduction at distributors from 80 days to 40 days
over the last 6 quarters. The company also streamlined the credit norms and corrected the
product portfolio.
The management expects 100bps improvement in EBIDTA margin over next 3 quarters due to
the change in distribution strategy.

Canara Bank: Weak growth and deteriorating asset quality drags profitability In Q1FY13,:: Karvy

Weak growth and deteriorating asset quality
drags profitability
In Q1FY13, Canara Bank’s performance came in below our expectations
with PAT growing at 6.8% YoY (down 6.5% QoQ) to Rs7.75 bn, owing to
weak growth in advances at 4.9% YoY (down 3% QoQ). NIMs declined 10
bps QoQ to 2.4%, Asset quality continued to deteriorate owing to higher
slippages and restructuring of loans. The bank reported treasury profit of
Rs988 mn against a loss of Rs 770 mn.

Persistent Systems-Growth driven by IP-Led:: BP Equities

Persistent Systems Ltd.

Growth driven by IP-Led, Management confident to grow above industry
Results Highlights
⇒ Persistent Systems posted decent set of numbers for Q1 FY13, with top line coming in line with
our expectations while profits and margins were below expectations despite rupee depreciation.
⇒ The company top line grew 11.1% Q-o-Q and 34.4% y-o-y to Rs 3.0 bn, in line with our estimate
of Rs 3.0 bn, aided by strong volume growth of 3.9% in linear business (due to higher Utilization),
strong IP led revenues and 9.7% rupee depreciation in the quarter.